All Forum Posts by: Irina Costea

Hi Charles, I am an architect here in the Los Angeles area and am currently doing a project in Pasadena (not real estate investment related, it is for a client). One of the reasons that the city is probably being illusive with regards to the timeline is because it really does, truly depend on where the property is, what overlay districts you are in, which departments are triggered by the scope of work you are trying to do, and what your scope of work actually is. If you are touching anything having to do with the historic department, everything is going to take much, much longer. If you would like to send me the address of the property via DM, I would be happy to look up a couple of things and point you in the right direction.

I have a neighbor that is in a distressed situation. She is in foreclosure, with a primary mortgage, secondary mortgage, and an additional lien on the property. She wants to sell, pay off all her debt, and move out of California to Ohio, where she has family. The house is in good condition, but needs some cosmetic and space planning work in order for it to sell for top dollar. She wouldn't be able to sell it on the market for how much she needs to pay off all her debts and have enough to set her up in Ohio (she already tried).

My partner and I are trying to "buy" the house from her for a certain amount of money, will take over the mortgage payments, fund the fixing of the house (our own cash or HELOCS), and then will sell it for profit. She will receive the initial "buy" amount that we agreed on, a portion of which is going to be paid up-front in order to bring her mortgage current and give her enough to move out to Ohio, and then a percentage of the final sale amount.

The reason this flip works is because we are avoiding going through two purchases and also avoiding financing fees from a HML on the purchase of the house, since the owner will still own the house during renovations.

Since she doesn't own the house outright, this isn't really "seller financing," but maybe more like a joint venture?

What kind of legal documentation do we need to make sure all parties are covered in this situation? I would assume that she adds us to the title via quitclaim deed, but the mortgage(s) stay in her name. She will move out to Ohio, we fix up her house, put it on the market and sell it, and she will do her part (signing documents, etc.) from Ohio (the percentage of the sale price is the motivation for her cooperation).

I feel good about the fact that we are swooping in at the very last minute and are able to help out a neighbor, while also giving us a nice flip opportunity. Being able to pay a higher amount because we can avoid major holding costs from a HML is what is making this deal work. I just want to make sure that all of us are covered and protected legally. Everyone is happy right now, but if bumps arise, I want to ensure both her cooperation and that we make good on our promises.

Has anyone done something like this? How did you structure the deal?

Did you have issues with the loans being called once the quitclaim was recorded and there was another person on the title?

If nothing else, does anyone have a real estate lawyer in the Los Angeles area that they have worked with that you would recommend?

Thank you in advance for your help, advice, and referrals!

@Vincent Ludegna

An ADU is an acronym for an "accessory dwelling unit". It's also often called a back house, granny flat, etc. it's basically a little unit that in California, as of a couple years ago, is legal on an R1 property. So, where before you could only have a single family home, you can legally have an additional unit.

It isn't a duplex because the rules around it are a little different and the ADU has to truly be accessory to the house, usually limiting its square footage to 1/2 that if the house and no more than 1,200 square feet regardless of the house square footage. You are also exempt from some additional parking requirements as well if you are within a certain distance of a bus stop, and it doesn't need to be a new building, you can carve the space out from the house or sometimes convert a garage. It depends a couple of factors.

If you do a quick google search, there are a lot of resources online as well.

As far as cost, I would say $150 to $250 per square foot for new construction depending on finishes you choose, etc. The cost can be lower too if you are converting a garage or using existing construction.

Hope that helps!

I am very curious to hear how your investing in Romania goes, Roxani. I am Romanian, technically an immigrant, but really have more of a first generation experience as I came over with my parents when I was just 2 years old. They are from Cluj and I have thought about the idea of investing in Romania, but I really wouldn't know where to start. @Paul Dumbravanu, if you have any ideas of where I could get some education on the market in Romania, particularly Cluj, I would love to know!

Thank you.

Hi Vincent,

I am here in the LA area too and am also doing a house hack. Finding a duplex is going to be very hard in that price range in most of the LA area. I have a suggestion for you though. Try to find a single family home that has the opportunity to add or convert part the existing structure into an ADU. You could live in the smaller ADU and rent out the rest of the house.

Hope that helps!

In my personal opinion, Inglewood is going to be showing the most growth over the next few years. With the Rams stadium going up, there will be a lot of jobs formed and more people wanting to move to that area. Also, as you said, there should be some trickle down from silicone beach. Culver City is quite expensive and so is Fairfax/Midcity. Unless you are going for large multi, 300k/door might be challenging. Unfortunately I am not sure about Pasadena as I am not very familiar with that area, but as far as I know, Pasadena is a bit expensive as well. I would look at areas more like Highland Park nearby which is getting a lot of Echo Park and Silver Lake trickle because of how expensive those areas have gotten. What is your overall budget? How many doors do you want to buy at max 300k/door? I think that is going to make a big impact on whether you can hit the.m revenue you are looking for. I think the best course of action would be to find a junky Inglewood building close to the Culver City border and put some money into updating finishes and the exterior/landscape to attract young professionals that will be moving in the area in the next few years. Hope I helped!

Hi Mike,

I am an interior/architectural designer in the Los Angeles area. I mostly do commercial work now, but when I did do residential, we would ALWAYS invite multiple contractors to bid! You will never get the lowest price from a single contractor. I would strongly recommend designing the kitchen yourself and then bid it out. I would create a plan and rough elevations that would probably take you an couple hours to do and call out the materials and locations of sink, stove, dish washer, fridge, etc.

I am not sure how you are structuring your construction and if you have a general GC or you are acting as the GC. If it were my project, I would hire subs and act as the GC. I would try to keep utilities in the same location, or move them as little as possible in order to reuse the existing infrastructure (moving gas lines, water line, etc can be expensive). And, I would buy the materials myself in order to avoid mark ups on materials. You could ask the contractors for labor-only prices and say that you will provide the materials. You could also tell them that if they have any cost-saving suggestions that you would give them a bonus if they saved you money. That way, if they know of a local place with very well priced materials or appliances that would save you money, they would be encouraged to share with you while also being rewarded.

I decent place to start would be Ikea. They have good design at reasonable prices. And, I believe they have a design program on their website where you can utilize their products. That way, even if you don't use their cabinets, you at least have a jump point for going to another cabinet manufacturer.

If you need help with the layout, and you can send me a scaled floor plan and some images, I would be happy to do a little hand sketch for you of a recommended layout :) No strings attached, I am just trying to network a bit here on BP as an experienced designer and a fairly new real estate investor. PM me if you are interested.

Best of luck!

Hi Chris,

I am a local architectural designer in the area and am familiar with LA zoning. Depending on exactly where your parcel is situated in the area, it would influence the possibility of re-zoning. However, this is a pretty hard thing to do. The good news is that you already own the land and are making at least a decent return. Re-zoning can be a long process, and if you are buying land and banking on re-zoning, you are taking way too big of a risk.

Regarding going in with your neighbor, that is an interesting possibility, depending on how large the neighbor's parcel is. Assuming that it is the same size or similarly sized as yours, you could build 5 units. You might also be able to appeal to zoning to add a 6th since you would be close to the threshold for 2, arguing LA's need for housing at the moment. But, this of course is another gamble. Also, going in with your neighbor on something would require a lot tie.

If you decide to go forward with anything, please feel free to message me! I am always looking for new business and would be excited to work with a real estate investor in the area.

I wish you the best!

Unless you get some kind of "cash for keys" agreement with all tenants BEFORE you buy and have that in writing (not sure how you would go about this exactly, but maybe it is somehow possible?), I would not buy rent controlled in LA. Or, do so such that you can make a profit if you have to inherit all rent controlled tenants.

Rent control is kind of a sensitive issue right now in LA. With prices of property having shot up considerably in the last few years, and neighborhoods' resistance of gentrification, I think you will encounter a lot of resistance regarding rent control. Tenants of rent controlled units in LA know that they are sitting on gold and have few options for similarly priced/comparable housing.

Another alternative you might want to look into in called the Ellis Act. It is a way to basically take the property officially off of the rental market for major construction/renovation or if the landlord wants to move into the property. It takes the property off of the market for 5 years before it can be rented again. Or, if it is put back on the market during the 5 year time, I think you need to offer it to the original tenants first, but I am not sure how rent control plays into this. Might be an interesting thing to look at regardless, if nothing else to understand if you are buying an Ellis Act property regardless of it is rent controlled or not. I was looking into a good "deal" recently only to find out that it would not be able to be rented for years if I were to purchase it.

Hope I helped a little!

I agree with the responses above, I think it would be a violation of the Ellis Act. I am wondering if you have any architectural or interior design needs with regards to the new apartment building? I am a local designer looking for extra work at the moment to help fund some of my own real estate investment endeavor. :) Let me know if you are interested, I can show you some of my work both residential and commercial. Wish you the best!